October 04, 2019

Off the Top of My Head

California Paves the Way for Public Banks!

by John Lawrence, October 4, 2019

While the rest of the nation dithers and wrings their collective hands over Trump, California is moving forward passing a bill on rent control, gig workers and now PUBLIC BANKING. Thanks to Ellen Brown's pioneering work, California will now become the second state in the nation (after North Dakota) to have a public bank. This means that billions of dollars won't be sent to Wall Street any more but will stay in the state. More money will be available for affordable housing, student loans at affordable rates, infrastructure and tax relief. Just possibly savers may finally get a reasonable rate of interest on savings accounts. And when the next financial crisis comes, California will weather the storm in much better shape than the rest of the nation just as North Dakota did in 2018.

This was hailed as a “stunning rebuke to the predatory Wall Street megabanks that crashed the global economy in 2007-08.” “Today’s signing sends a strong message that California is putting people before Wall Street profits,” said Assemblyman David Chiu (D-San Francisco), who co-authored the bill (AB 857) with Assemblyman Miguel Santiago (D-Los Angeles). “We finally have the option of reinvesting our public tax dollars in our communities instead of rewarding Wall Street’s bad behavior,” he said. “This new law prioritizes communities and neighborhoods by empowering localities to use public dollars for their own public good: from investing in affordable housing projects and building new schools and parks, to accessible loans for students and businesses,” Santiago, the bill’s co-author, said in a statement.

At first the law limits to 10 the number of public banks that can be actualized. That means that probably only California's largest cities will create them. Certainly Los Angeles, San Francisco and San Diego should be among the first to go through the rigorous process of forming a public bank. The LA Times reported:

The law provides a path for cities and counties to pursue a public-bank license that has several “checks and balances built in, with layers of oversight and accountability” said Sushil Jacob, a senior attorney with the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area. The committee is part of the California Public Banking Alliance, which pushed for the new law.

For example, the city or county would have to establish a separate corporation with an independent board of directors, and it would have to obtain approval from the Federal Deposit Insurance Corp. to obtain deposit insurance, Jacob said.

The new public bank and its business plan also would need approval from the state Department of Business Oversight, and “the public has to be given the opportunity to weigh in on the [bank’s] viability study before a local agency can approve it,” he said.

“There also are startup costs involved, such as hiring consultants and developing a business plan,” and it’s expected that the state’s largest cities and counties, such as Los Angeles and San Francisco, would be among the first jurisdictions to apply, Jacob said.

The process likely would take one to two years, he added.

If this process works well for cities and counties, the next step would be the establishment of a public bank for California as a state and not just allow them in cities and counties. There is a lot more money involved at the state level than at the local level like the CalPERS pension fund and state tax revenues. The California Public Employees' Retirement System (CalPERS) is an agency in the California executive branch that "manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families". In fiscal year 2012–13, CalPERS paid over $12.7 billion in retirement benefits, and in fiscal year 2013 it is estimated that CalPERS will pay over $7.5 billion in health benefits. As of June 30, 2014, CalPERS managed the largest public pension fund in the United States, with $300.3 billion in assets. As of 2018, the agency had $360 billion in assets.

Today in the U.S., state and local governments hold $502 billion in bank deposits (not to mention $4.3 trillion in state and local public pensions). Progress on public banks in California will be closely watched in other states and cities where organizers and public officials have been pushing for public banks — including Washington State, New Mexico, Michigan, New Jersey, the District of Columbia, New York City, Philadelphia, Chicago, the Twin Cities, Portland, Seattle, and elsewhere.

Ellen Brown's latest book is "The Making of a Democratic Economy." She has also written "Banking on the People - Democratizing Money in the Digital Age," "The Public Bank Solution," and "Web of Debt." She is largely responsible for the public banking movement. Other articles on public banking have appeared in the San Diego Free Press: Public Banking: How a Public Bank Could Benefit San Diego – Part 4.

The bugaboo in this whole thing could be the need for Federal Deposit Insurance. Trump could get his hands in there and put the kabosh on the whole thing. However, the need for a marijuana bank is an incentive to follow through on the creation of public banks as well as a distaste for Wells Fargo and all the illegal behavior they have been involved in. Jamie Dimon and Lloyd Blankfein are not amused.

Comments

Off the Top of My Head

California Paves the Way for Public Banks!

by John Lawrence, October 4, 2019

While the rest of the nation dithers and wrings their collective hands over Trump, California is moving forward passing a bill on rent control, gig workers and now PUBLIC BANKING. Thanks to Ellen Brown's pioneering work, California will now become the second state in the nation (after North Dakota) to have a public bank. This means that billions of dollars won't be sent to Wall Street any more but will stay in the state. More money will be available for affordable housing, student loans at affordable rates, infrastructure and tax relief. Just possibly savers may finally get a reasonable rate of interest on savings accounts. And when the next financial crisis comes, California will weather the storm in much better shape than the rest of the nation just as North Dakota did in 2018.

This was hailed as a “stunning rebuke to the predatory Wall Street megabanks that crashed the global economy in 2007-08.” “Today’s signing sends a strong message that California is putting people before Wall Street profits,” said Assemblyman David Chiu (D-San Francisco), who co-authored the bill (AB 857) with Assemblyman Miguel Santiago (D-Los Angeles). “We finally have the option of reinvesting our public tax dollars in our communities instead of rewarding Wall Street’s bad behavior,” he said. “This new law prioritizes communities and neighborhoods by empowering localities to use public dollars for their own public good: from investing in affordable housing projects and building new schools and parks, to accessible loans for students and businesses,” Santiago, the bill’s co-author, said in a statement.

At first the law limits to 10 the number of public banks that can be actualized. That means that probably only California's largest cities will create them. Certainly Los Angeles, San Francisco and San Diego should be among the first to go through the rigorous process of forming a public bank. The LA Times reported:

The law provides a path for cities and counties to pursue a public-bank license that has several “checks and balances built in, with layers of oversight and accountability” said Sushil Jacob, a senior attorney with the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area. The committee is part of the California Public Banking Alliance, which pushed for the new law.

For example, the city or county would have to establish a separate corporation with an independent board of directors, and it would have to obtain approval from the Federal Deposit Insurance Corp. to obtain deposit insurance, Jacob said.

The new public bank and its business plan also would need approval from the state Department of Business Oversight, and “the public has to be given the opportunity to weigh in on the [bank’s] viability study before a local agency can approve it,” he said.

“There also are startup costs involved, such as hiring consultants and developing a business plan,” and it’s expected that the state’s largest cities and counties, such as Los Angeles and San Francisco, would be among the first jurisdictions to apply, Jacob said.

The process likely would take one to two years, he added.

If this process works well for cities and counties, the next step would be the establishment of a public bank for California as a state and not just allow them in cities and counties. There is a lot more money involved at the state level than at the local level like the CalPERS pension fund and state tax revenues. The California Public Employees' Retirement System (CalPERS) is an agency in the California executive branch that "manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families". In fiscal year 2012–13, CalPERS paid over $12.7 billion in retirement benefits, and in fiscal year 2013 it is estimated that CalPERS will pay over $7.5 billion in health benefits. As of June 30, 2014, CalPERS managed the largest public pension fund in the United States, with $300.3 billion in assets. As of 2018, the agency had $360 billion in assets.

Today in the U.S., state and local governments hold $502 billion in bank deposits (not to mention $4.3 trillion in state and local public pensions). Progress on public banks in California will be closely watched in other states and cities where organizers and public officials have been pushing for public banks — including Washington State, New Mexico, Michigan, New Jersey, the District of Columbia, New York City, Philadelphia, Chicago, the Twin Cities, Portland, Seattle, and elsewhere.

Ellen Brown's latest book is "The Making of a Democratic Economy." She has also written "Banking on the People - Democratizing Money in the Digital Age," "The Public Bank Solution," and "Web of Debt." She is largely responsible for the public banking movement. Other articles on public banking have appeared in the San Diego Free Press: Public Banking: How a Public Bank Could Benefit San Diego – Part 4.

The bugaboo in this whole thing could be the need for Federal Deposit Insurance. Trump could get his hands in there and put the kabosh on the whole thing. However, the need for a marijuana bank is an incentive to follow through on the creation of public banks as well as a distaste for Wells Fargo and all the illegal behavior they have been involved in. Jamie Dimon and Lloyd Blankfein are not amused.